Local Government (Scotland)

The Secretary of State for Scotland (Mr. George Younger): I beg to move,

That the Rate Support Grant (Scotland) (No. 2) Order 1982, a copy of which was laid before this House on 15th December, be approved.
The House received notice as long ago as 28 July of the general approach which I propose to adopt to this settlement. Details of my final proposals were set out fully in the report on the order, which was laid on 15 December. I do not therefore propose this evening to take the time of the House on a detailed recital of the provisions in the order, all of which are printed anyway in the order and its accompanying memorandum, but it may help hon. Members if I give a brief summary of the main features. Thereafter, I should like to deal in detail with some of the main issues that arise from this settlement.

The key to any RSG settlement is the level of relevant expenditure assumed by the Government and commended to authorities. For 1983–84 the expenditure total is £3,118 million. This is the first occasion on which it has exceeded the £3 billion mark. The magnitude of this sum illustrates both the importance of the services and the need for expenditure control by all concerned with local authorities.

Discounting loan charges and similar items, relevant expenditure amounts to £2,660 million. That represents an increase of over 9 per cent. on the corresponding planning figure that we allowed for in 1982–83. This is well above the rate of inflation. Taking that into account, it implies a reduction of only about 3 to 4 per cent. from the level of expenditure that was actually planned by local authorities for 1982–83. This seems to me to be a very generous provision to make, given the economic difficulties that we face. I think that it strikes a very good balance between the aspirations of local authorities and the need for reductions in the national economic interest. The order makes provision for aggregate grant of £1,924.25 million. That is an increase of 3.5 per cent. over the 1982–83 figure.

I have no doubt that some will be critical of the fact that the grant expressed as a percentage of relevant expenditure is lower than it was last year. However, the primary objective of the lower rate of grant is to secure reductions in expenditure and not to transfer burdens.

The right hon. Member for Glasgow, Craigton (Mr. Millan) will no doubt recall that he also adopted the device of cutting grant as a means of reducing expenditure. Between 1975–76 and 1977–78, grant was reduced from 75 to 68.5 per cent. The right hon. Gentleman is quoted in a press article on 1 December 1981 as having written:
Central Government already had effective weapons which they could use to try to influence the level of council spending—like reducing the percentage of rate support grant.
Hon. Members will have noted that, as before, the actual rate of grant in Scotland proposed for 1983–84 of 61.7 per cent. is considerably more than the grant in England of 52.8 per cent. The difference is longstanding and Opposition Members will be aware that it arises from three important factors.

Differences in the composition of relevant expenditure—for instance in the treatment of rate fund contributions to housing—are included in relevant expenditure in England but not in Scotland. The other
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factors are the comparatively lower level of rating resources in Scotland and the comparatively higher level of need in Scotland.

Approximately £180 million will be distributed as specific grants in support of expenditure on specific services. The balance of £1,744.25 million will be distributed as rate support grant. The arrangements for grant distribution have been extensively discussed with the Convention of Scottish Local Authorities, which agrees with my proposals to maintain domestic relief at 3p in the pound, the same level as in 1982–83, and to allocate the balance between the needs and resources elements in the ratio of 7:1.

The resources element will be distributed in accordance with the arrangements laid down by statute. Provision is made in the needs element for continuation of special assistance towards oil-related expenditure, and a small part of the needs element will be distributed among regional and islands councils in accordance with the incidence of youth unemployment in their areas. There is also special provision for the protection of low spending authorities against the effects of the £27 million general abatement of grant, which I had to make most reluctantly in response to the planned overspending for 1982–83.

As a result, no authority spending within the guidelines will lose any grant and no authority will lose more in grant than its excess over the guidelines. Otherwise, the needs element will be distributed in accordance with the demographic formula, which is designed to recognise local differences in expenditure needs.

Provision is made for additional grant amounting to about £1 million to Orkney Islands council to ease the effect on that authority of the order laid before the House today which provides for the derating of certain external plant and machinery.

Provision is also made for a modest increase in the total grant payable to district councils to help them meet expenditure on certain functions which they are to assume from regional councils under the provisions of the Local Government and Planning (Scotland) Act 1982. The amount that is transferred is necessarily an estimate, since the transfer of functions does not become effective until 1 April and some decisions have yet to be made. This is therefore a transitional year. However, I look to authorities to undertake the new responsibilities in a spirit of cooperation, striking a reasonable balance between the need for economy and the interests of the bodies concerned with the arts.

If the Secretary of State is making such parade of virtue in giving extra allowance for the transfer of functions in accordance with the Stodart plan, why is it that the district council guidelines have remained exactly the same as those for last year?

I was just about to mention that. It has arisen because of the balance of the expenditure on the various services, some of which are regional and some district functions. That is all well explained in the order.

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If authorities plan for expenditure reasonably in line with the level assumed in the settlement, there should be no need for substantial rate increases. The average increase should certainly be within the overall rate of inflation. However, I do not propose to put a precise figure on the average, which will depend on the moderation shown by individual authorities.

The right hon. Member for Craigton may be inclined to agree with my caution this year, bearing in mind the extraordinary inaccuracy of his forecast last year. He said to the House during the debate on the 1982–83 order:
I should be astonished if the overall increase in rates in 1982–83 is not over 20 per cent. or 25 per cent. I stand by that figure."—[Official Report, 10 February 1982; Vol. 17, c. 992.]
The actual figure, instead of being 20 to 25 per cent., was 12.3 per cent.—the right hon. Gentleman was about 100 per cent. wrong—and it would have been much lower had the authorities followed our advice on expenditure levels.

I shall try to deal with the remarks that have been made by many people recently which, generally speaking, give the impression that practically everything that one can think of in local authority expenditure has been cut again and again, that services everywhere have been slashed to the extent that they are hardly worth having and that there has been hardship and deprivation all round. Most of that is absolute rubbish.

I have recently reviewed the figures that have been achieved in recent years during consultations with the convention. They show that, at constant prices, expenditure by authorities rose in three successive years from 1977–78 to a peak in 1980–81. In real terms, the figures are £2,351 million for 1978–79, £2,403 million for 1979–80, £2,457 million for 1980–81 and the provisional figure for 1981–82 is £2,429 million, which is a slight reduction. However, it is the second highest total ever produced by a long way. Against that background, talk about slashed services and dreadful hardship everywhere is plainly nonsense. Provisional returns show a modest reduction between 1980–81 and 1981–82, but the figure for the latter year remains significantly above the level in 1977–78, a year in which the right hon. Gentleman was responsible for such matters. He did not believe then that services were being slashed or that people were suffering terrible hardship.

Had they obeyed our instructions, it would have been extremely satisfactory and the authorities would be in a much better position today. But, alas, that has not been the case, which is a source of great disappointment to me and to many others.

Economies have been made by some authorities during the past three years. That has been attributable in some cases to the vigorous action taken by the Government in 1981 and 1982 and in other cases to the sheer good sense of the authorities concerned. But it is nonsense to claim that the events of the past three years have left no scope for further reductions. The job of bringing about the reductions that are required in the national economic interest must still be done.

This analysis is strongly supported by the evidence of the staffing figures returned by authorities. During the past year local authority staff numbers in Scotland have fallen
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by just under 2 per cent., an encouraging development following the continual upward trend shown previously. But the reduction is entirely attributable to a fall in the number of manual staff and those employed in the education service. Even in education the percentage reduction has been less than the fall in the school population. The net effect is that the numbers of non-manual staff other than teachers and lecturers have increased over the year. There are 5,000 more than in 1979 and 10,000 more than in 1977. This again makes absolute nonsense of the idea that all services have been slashed to a disastrous level and that nothing is happening as a result. That is clearly rubbish.

Clearly there is scope for substantial reductions without reducing the standard of service to an unacceptable extent. Past experience, especially when authorities as a whole made substantial cuts in staff numbers in response to pressure exerted by the previous Administration, of which the right hon. Member for Craigton was a member, in 1977–78, indicates that sensible economies can be made without recourse to large-scale redundancies. I very much hope that all authorities in Scotland will undertake a searching review of their manpower policies. This is exactly what we in central Government have been doing since we took office. In the Scottish Office, for example, staff has been cut by over 7 per cent., or by over 13 per cent. if one excludes the prison service and the State hospital.

The implications of these trends in expenditure and staffing have of course been extensively discussed during the consultations with the convention which preceded the settlement. Of course it is true that not all differences have been resolved in the course of consultations, and of course the convention has criticised the settlement in a circular letter to hon. Members. However, I must reject any impression which may have been put about that we have failed to consult or to respond to reasonable arguments advanced in the course of the consultations. For example, I have listened carefully to the points put to me by the convention concerning the difficulty that authorities would experience in bringing down their expenditure to the level proposed for 1983–84 in last year's public expenditure White Paper. On 28 July I announced that the level originally proposed would be enhanced by £120 million. I announced a further increase by £21 million when I met the convention on 10 December. In addition, I was able to add £4 million to the relevant expenditure figure, reflecting my expectation after discussion with the convention that fees for further education courses at local authority colleges would be brought into line with those charged by central institutions.

I was also able to meet the views of the convention to a large extent in the arrangements for distributing grant in 1983–84, in particular by maintaining the ratio of the needs to the resources element of 1:7 and in giving high priority to stability of grant in the arrangements for the distribution of needs element. As hon. Members will be aware, the prompt and decisive action taken by the Government in introducing the Lands Valuation Amendment (Scotland) Act 1982, in response to representations from the convention about the prospective loss of rate income which would otherwise have resulted from a court decision concerning the valuation of plant and machinery producing heat, light and first motive power, was welcomed by all concerned. I was grateful for the Opposition's support in that matter. Of course differences
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must remain, but I am sure that the House should be aware that a constructive dialogue between central and local government has been maintained and that I gave due weight to the advice of the convention, wherever possible, in framing the proposals for the settlement.

A further feature of the past year has been the enactment of the provisions in the Local Government and Planning (Scotland) Act 1982 enabling me to require the reduction in the rate poundage levied by an authority planning for excessive and unreasonable expenditure. These provisions extended section 5 of the Local Government (Scotland) Act 1966, as amended in 1981, under which the authority had discretion to cut the rate poundage as an alternative to a reduction in rate support grant.

I should not wish to go over the ground that was covered so extensively during the passage of the 1981 and 1982 measures, but I should like to comment on one criticism that is persistently made from the Opposition Benches. These are reasonable powers, which represent an extension of provisions that have been on the statute book for more than 50 years. Their main purpose is to ensure that action can be taken in the interests of the ratepayer at an earlier stage than was possible under the original provisions. I do not accept that the constitutional relationship between central and local government has been altered at all by these measures. They need not be used if authorities as a whole plan for moderate levels of expenditure. It is open to any authority against which action is initiated to avoid grant loss or an imposed rate reduction by moderating its plans.

These points are well illustrated by the use made of the powers in 1982. Action was initiated against two authorities, Lothian regional council and Stirling district council. In both cases I was able to suspend action when the authorities agreed to make substantial cuts in planned expenditure and to pass the benefits back to the ratepayer. The outcome was very successful. Stirling district council reduced its rates so that its ratepayers had a rates freeze for 1982–83. In Lothian the electorate had the opportunity to make their views known and, as the loss of control by Labour showed, their view was clear. Lothian ratepayers then benefited from a substantial rates reduction of 16p in the pound.

I have this year continued the practice started by Opposition Members of issuing current expenditure guidelines. These figures are intended to help authorities plan their expenditure in accordance with the Government's plans. The guidelines have recently been the subject of much discussion and comment, largely because we decided last year to move to a method of calculation that was both open and systematic, in contrast to the approach that we inherited on assuming office, under which more arbitrary figures were issued with virtually no information to authorities about the basis of the calculations. I welcome the exchanges that we have had with the convention on this subject, and I look forward to further discussion in future years.

Under the system introduced last year, the guidelines are based on a systematic analysis of expenditure patterns by service and sub-service. Details of the system have been fully explained to authorities. They will shortly be receiving, as they did last year, the detailed workings for each service. Of course, I recognise that in dealing openly
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with authorities on matters of this kind there are risks that those who favour a free-for-all in local authority expenditure will seek to discredit this system by distorting the information that we make available. However, that is a risk that I must take. The system is sound. I am confident that the figures that it is producing constitute a valuable aid to all authorities, except the few which are determined not to co-operate with the Government's economic policy. My purpose in dealing openly with the convention is to provide it with a full opportunity to contribute to that process. I very much hope that it will continue to respond positively.

Will the Secretary of State address himself to the crisis facing national arts bodies in Scotland as a result of the irresponsible attitude adopted by a number of local authorities, not least the Lothian regional council? Will he say a word about that and give an indication of the Government's determination to protect such bodies?

I share the hon. Gentleman's concern in this connection. As he will have seen, we have taken notice of the difficulties that are involved. I do not believe that the alarm that he has expressed is quite as serious as it might have been. The Government have increased their cash grant to the Scottish Arts Council by 7 per cent., so that the Scottish Arts Council will be in a position to make commitments about £1 million above the 1982–83 level. The Scottish Arts Council will also receive a further £500,000 in the current year from the Arts Council of Great Britain's supplementary grant of £5 million recently announced. I hope that those local authorities that are not making due provision for the arts will look again at their plans and bear in mind how serious it would be if the arts were not adequately supported.

Two further points are worth making about the 1983–84 figures. First, not all the expenditure provision has been allocated to guidelines. A total of £120 million has been withheld from the guidelines, so that individual authorities have been set very stringent targets. I should have much preferred to avoid doing that, but it has been forced upon me by the failure of authorities so far to cut their spending. Experience suggests that budgets will exceed guidelines. The guidelines for 1983–84 make some allowance for this, so that even with a modest excess over the guidelines total planned expenditure will still be within the target. We have already tried a wide range of measures to encourage moderation, and I believe that this new approach is well worth trying in 1983–84.

Second, district councils have the same guidelines as last year. We had planned in the public expenditure White Paper for a reduction in district council services. However, the proposed reduction was offset by a transfer from provision for regional council services, which was made to match the transfer of functions for which provision was made in the Local Government and Planning (Scotland) Act. The total planning figure for district council services was therefore the same as last year, and to avoid undue fluctuations from year to year the guidelines are unchanged. The only exception to this is where some authorities will see an apparent reduction in their guidelines because for 1984–85 we have removed the urban programme from guidelines.

I know that there has been some misunderstanding about the methods that we have adopted in dealing with
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this highly technical aspect of the settlement and that some concern has been voiced on behalf of individual authorities. However, let me assure the House that for 1983–84 the guidelines remain, as they have always been, indicative only. Withholding £120 million from guidelines has no effect on entitlement to grant, and this unallocated margin will be fully taken into account when local authorities' budget estimates are compared with the target figure. If authorities keep total expenditure reasonably in line with the settlement assumption, there should be no need for action to cut grant, whether by selective reductions or by general abatement. I am confident that the guidelines will be of considerable assistance to all authorities disposed to plan expenditure on that sensible basis.

Of course, the last few years have been difficult ones for everyone in local government. The country has battled its way through the worst recession any of us can remember. Everyone—those in business, families and individuals too—has had to play a part in that fight. I have sought to encourage local government to play its part by reducing its expenditure too and to do so early enough to avoid too much difficulty. One can take the view that local government should always increase its spending—spending more every year than in the previous year. That is the clear implication of what many Labour Members are saying. However, that is not the view of the ratepayers and taxpayers who provide every penny that councils spend. If they can make savings and cut spending in their businesses, why cannot local government play its part in doing the same?

It is against that background that we must see the achievement that we have made so far—stopping the spending increasing at a rate that no one can afford. So far from being unduly harsh, I and the Government have literally leant over backwards to make that task less difficult. [Interruption.] We have twice enhanced the planning figures to make it less difficult for authorities to reach their figures. We have made every effort to warn local authorities in good time that reductions were coming so that they could be made in good time with less difficulty. Indeed, on several occasions—my ministerial colleagues will support me on this—I had to look at savings within my programmes at the Scottish Office to make it slightly less difficult for local authorities to meet the targets which some had not made much effort to do.

This has been a difficult period, but the vast majority of people in local government have been doing their best to change habits which have gone on for a long time and have at last begun to bring spending under control. It is against that background that I hope the order will be seen, and I commend it to the House.

The Secretary of State's bland account of his relationships with the local authorities will be completely unrecognisable to any hon. Member who met the representatives of CoSLA today and heard expressed in the most vigorous terms their extreme anger and bitterness about the way in which they have been dealt with by the Secretary of State, not only this year but in previous years as well. That was an anger expressed by some people on his side of the political fence as well as by others who are politically opposed to him.

I want to make two particular points before turning to the main substance of the debate. First, the timing of the
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debate this evening has not followed the rather more agreeable and desirable arrangements that we made last year. That is particularly serious for the housing support grant debate which will start at a late hour. That order, which will be dealt with by my hon. Friends later, represents a tremendous slashing of Government support to housing in Scotland and it is not good enough that that should be dealt with late in the evening, as it inevitably will be.

Secondly, the order on derating of external plant and machinery, which the Secretary of State mentioned, has been laid today, and I have just seen it. I shall not go into detail on that because we shall be able to have a separate debate on it. However, it is typical of the way in which the Secretary of State consults local authorities and listens to their representations that when they ask him, as indeed did the CBI, whether central Government could bear the burden of this derating rather than that it should be spread over the rest of the ratepayers in Scotland, he should do exactly the opposite. He has done that despite all his promises at various times during the passage of the main legislation that all was under consideration—something we did not believe for one moment. The rest of the ratepayers, including, let it be said, the industrial ratepayers represented by the CBI, are paying for this external derating of plant and machinery and we shall go into that betrayal of the Secretary of State's promise when we debate that order.

I shall inevitably be repeating the kind of criticisms that we have made in earlier years on previous rate support grant orders. First, the consultation has been a farce. This year it has been an even greater farce, because most of the details were announced to the House in July before the Secretary of State had met the local authorities. The Secretary of State has again set unrealistic expenditure levels. In past years he has assumed unrealistic inflation rates as well. The guidelines are simply unattainable by the vast majority of local authorities. He has continued the cuts in the previous rate of grant and he is continuing with the penalties on local authorities. The net result of all that over the years is that we in Scotland are paying a high rates bill and at the same time suffering from poorer services.

Before I mention the expenditure levels of 1983–84, let me look briefly at what happened in 1982–83, because this order contains a penalty provision for that year. The Secretary of State has earlier stated that the authorities overbudgeted by about £200 million in 1982–83 compared with the guidelines, or about 8.3 per cent. As it has turned out, the actual figure according to CoSLA is £182 million, rather less than £200 million, but no less than £47 million of that has been taken up with extra inflation which was not provided for in the Secretary of State's order last year. Therefore, the real overbudgeting has been about £135 million and it is on that figure that the penalty of £27 million is being made in the current year.

Let me say again that we are against the penalty provisions in the current legislation and that we therefore completely oppose this penalty which is being imposed virtually on the whole of Scotland's local authorities, with one or two exceptions, such as those authorities which will obtain refunds based exclusively on the guidelines that the Secretary of State says are only indicative and are not taken into account for any substantial purpose. Yet that particular refund to certain local authorities, in Scotland which is in any case minor, is being based exclusively on their performance in relation to the guidelines. I shall
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demonstrate later that the guidelines for most authorities are absolutely absurd. The Opposition are opposed to penalties and also to the way in which the guidelines have been used by the Secretary of State.

The right hon. Gentleman virtually boasted this afternoon that he had increased the amount of relevant expenditure on which he proposes to pay grant in 1983–84. For past rate support grant orders the relevant expenditure has been so completely out of line with local authority budgets and expenditure that the Secretary of State has added something to it to bring it nearer to the true figure—but at the same time he has reduced the rate of grant by about 2½ per cent. Rather remarkably and miraculously, the amount of grant payable is the same as it would have been had he not added £120 million to the relevant expenditure and had paid the rate of grant for 1983–84 at the same level as 1982–83. His generosity is not really generosity—he has increased one figure and reduced another to reach the original figure. The £120 million is not included in the guidelines, so there is no prospect of local authorities achieving their targets.

The Secretary of State had the impertinence to claim that there has been no great slashing of services by local authorities. He quoted the expenditure figures for the past few years but he did not say that in every case the figures were significantly more—about 7 or 8 per cent.—than the Secretary of State had said that local authorities should spend to meet his guidelines. There have been poor services but no slashing of services, because local authorities sensibly acted in the interests of their ratepayers and electors by not following the right hon. Gentleman's injunctions. They preserved a reasonable level of services. If they had followed his guidelines, there would have been a disastrous reduction in services in Scotland. I shall give the House figures to demonstrate that point later.

It is typical of the Secretary of State's dishonesty that, while he asks local authorities to slash their services, when they do not obey him he takes credit for the fact that the services are reasonably maintained.

I look forward to the hon. Gentleman's speech, when he will no doubt describe the slashing of services that will take place in the Lothian region that is now under the control of his friends. I hope that he will defend that policy rather than make pathetic statements to the press, as he did during the weekend.

Figures have been produced by CoSLA, and I challenge the Secretary of State to disown them or to show any inaccuracy. What would be the position in 1983–84 if local authorities simply budgeted for the same amount of expenditure as in 1982–83 but updated the figure to take account of the Secretary of State's figures for inflation? Even on that figure, the result would be a reduction in services in real terms of between 3 and 4 per cent. The right hon. Gentleman mentioned that figure in his speech—[Interruption.] I see that the right hon. Member for Glasgow, Hillhead (Mr. Jenkins) has decided not to join us. This subject is obviously rather beyond the Social Democratic Party.

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If the local authorities obeyed the guidelines laid down by the Secretary of State, the regions would have to reduce their expenditure in 1983–84 by 7.2 per cent. in real terms and the districts would have to reduce their expenditure by 11.8 per cent. in real terms. In Scotland as a whole, there would have to be a reduction in expenditure of 7.8 per cent. in real terms in 1983–84. I am glad to say that the Secretary of State has not a hope of that happening. It would mean the wholesale slashing of essential services in Scotland.

The district guidelines for 1983–84 again rather miraculously turn out to be exactly the same as those for 1982–83, down to the last pound. [Interruption.] The Under-Secretary of State seems to dispute that. Perhaps he would like to correct me.

Although additional burdens have been placed on the districts because of the Local Government and Planning (Scotland) Act, and although there will inevitably be inflation in 1983–84, the figures—which are meant to be built up district by district and service by service—are exactly the same in 1983–84 as they were in 1982–83. I have the figures in front of me. That point is confirmed in the Secretary of State's circular to the local authorities dated 26 November 1982. The circular confirms that the figures for the district have not been changed in 1983–84, despite what the Under-Secretary of State has said.

It is a farce to give the individual figures for each service and district. At the end of the day, the figures are exactly the same as those given for each district in 1982–83. In addition, the guideline figures for the districts bear no relation to the figures that are laboriously built up, on a needs basis, by considering individual services at district level. As the hon. Member for Perth and East Perthshire (Mr. Walker) will be interested to know, the representative from that area complained bitterly this afternoon that, although the needs figure was £6.5 million, the guideline figure is only £5.5 million.

There are other discrepancies. There is a discrepancy of £15 million between the needs and the guideline figures for Glasgow. At least the discrepancy is in the right direction from Glasgow's point of view. The needs figures either mean something or they do not. If they are calculated carefully and on the scientific basis that they are meant to be calculated on according to the Scottish Office, the guideline figures should coincide with the needs figures. But they bear no relation to the needs figures and are wholly artificial. They are based on exactly the same figures as in 1982–83. As every district knows, they are a mess and a farce.

The same anomalies exist in the regions. In Lothian the needs calculation increases next year by 1.6 per cent., but the guidelines increase by 3.95 per cent. In Strathclyde the needs calculation increases by 4.92 per cent., but the increase in the guidelines is less than that for Lothian and is 3.90 per cent. The whole system is shot through with anomalies.

In a sense, the anomalies are not as important as the effect on services if the local authorities tried to meet the
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Secretary of State's guideline figures. The guidelines are now so much of a farce that the local authorities in most cases are paying no attention to them.

As it was the right hon. Member for Glasgow, Craigton (Mr. Millan) who introduced the guideline figures originally, does he not agree that on such a theoretical basis for figures, whether needs figures or guideline figures are used, there are bound to be imperfections in the system; or has he a more ideal system that could be put forward now?

In a sense, it would not matter tuppence if it were not for the fact that the guidelines are being used to penalise local authorities that have exceeded them. The guidelines are now so nonsensical that the local authorities have no faith in them at all.

The Secretary of State, who claimed that there had not been any real reduction in services in Scotland over the past few years, did not let us have any insight into the type of reductions he is asking local authorities to make in 1983–84 in accordance with the guidelines. The Confederation of Scottish Local Authorities has sensibly provided us with some of the details. I am referring again to reductions in real terms on current year's budgets. There is allowance for inflation but no allowance for anything else.

The total education budget, which is of course the biggest budget, would have to be slashed in 1983–84, by 7.7 per cent. The figure is about £98 million. That is the Secretary of State's own figure. In the case of teachers, he is asking the local authorities to reduce expenditure by £55 million. When the local authorities say that that will mean sacking 6,000 teachers, the Secretary of State gives no answer. What is more, the Under-Secretary of State, the hon. Member for Edinburgh, North (Mr. Fletcher), who is not present, goes about proclaiming the beautiful pupil-teacher ratios in Scotland. We only have beautiful pupil-teacher ratios because the local authorities in Scotland are not mad enough to sack the 6,000 teachers who would have to be sacked if the education figure for teachers for 1983–84 was to meet the guideline. The Secretary of State is disputing that point. I shall give way to let him answer now.

The right hon. Gentleman knows perfectly well that the planning figure that we allowed for education still allows for the highest ever levels of pupil-teacher ratios, both in primary and in secondary education.

The Secretary of State is not answering the question. The guidelines provide for a reduction in education spending of £98 million, of which £55 million is for teachers. That will mean sacking 6,000 teachers. Does the Secretary of State dispute that? He cannot dispute it because it is the reality, but fortunately for the people and schoolchildren of Scotland the local authorities will not be mad enough to do what the Secretary of State asks.

Education is not the worst case. Libraries and museums are being cut by 13 per cent. Concessionary fares to old-age pensioners and to others, if they were to meet the Secretary of State's figures for next year, would have to be cut back by 41 per cent. Does the Secretary of State dispute the figures? He cannot dispute the figures because they are contained in the statement issued by the Secretary of State to the local authorities. Leisure and recreation expenditure would have to be reduced by 33 per cent.

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There is no point in the Secretary of State weeping crocodile tears for Scottish opera. He is an opera lover, which is something that can be said in his favour, but the local authorities, if they were to meet the leisure and recreation figures laid down by the Secretary of State for 1983–84, would have to reduce their budgets by 33 per cent. The Secretary of State knows that these figures are correct, but he has the brass neck to stand at the Dispatch Box and pretend that this could all be carried out painlessly in 1983–84. Next year, no doubt, he will be claiming that we still have the best pupil-teacher ratios ever even though that is because the local authorities have refused to obey the injunctions contained in the rate support grant settlement and in the guidelines issued along with it.

The Secretary of State knows that local authorities in Scotland will not make the cuts for which he asks in 1983–84. Does he honestly expect the £120 million to be saved or to be spent? He has not been clear about that. The Under-Secretary appears to be clear about it, and that is an innovation; because usually he is not clear about anything. I hope that he will clear the matter up. Local authorities are not clear about what will happen about the £120 million. What about penalties if local authorities—as they will—spend more next year than is provided in the rate support grant and guideline settlement? The issue is an unholy mess. The rate of grant in 1983–84 will come down to 61.7 per cent., compared with the 68.5 per cent. which the Secretary of State inherited when he came to office.

What about rate increases? The Secretary of State seems to take credit for the fact that domestic ratepayers in 1982–83 will not pay the increase that I forecast last year. I expect to hear more about that. Is it a matter for pride that the domestic ratepayer is paying 15 per cent. more in the current year than a year before? Does the Secretary of State take pride in the overall figures since he became responsible?

The Secretary of State told my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) on 23 December that the average domestic rate payments in Scotland, excluding water rates, rose from £137 in 1979–80 to £285 in 1982–83. That is an increase of more than 100 per cent., on expenditure which changed hardly at all in that period. Why has there been such a massive increase in rates when expenditure has increased only modestly? On numerous occasions we have explained the reasons which involve inflation, the setting of unrealistic expenditure levels and cuts in grant.

Local authorities have behaved with responsibility, but the unfortunate ratepayer in that three years has had to pay double. When water rates are taken into account the average payment in 1982–83 was more than £313.

The ordinary domestic ratepayer in Scotland used to pay less than English—though not Welsh—ratepayers. A consequence of the Secretary of State's stewardship is that by 1981–82 the ordinary domestic ratepayer in Scotland was paying more than the ordinary domestic ratepayer in England. There is no reason to be proud of that record.

Rate increases next year are likely to be modest. I agree with the Secretary of State about that. However, they will not be so modest if interest rates begin to rise again, as they have in the last week. They will not be so modest if various economic circumstances change and set the inflation rate increasing rapidly again. We have two parallel sets of
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figures—the local authorities' and the Secretary of State's. His figures have never matched reality and they will not in 1983–84.

Domestic ratepayers in Scotland have paid and will continue to pay a high penalty—even with the modest increase that is to take place next year—for the way in which the Secretary of State has dealt with local authorities in the past three years. They will continue to bear a high rates burden. They will enjoy services that are a good deal poorer than they ought to be and which are poorer than is necessary to deal adequately with the needs of the Scottish people. What is more, what has been achieved has been accompanied by bitterness between central and local government such as we have never before witnessed in Scotland. That is why the Opposition will vote against the order.

I felt that we were watching and listening to a video recording of last year's speech when the right hon. Member for Glasgow, Craigton (Mr. Millan) told his tale of woe, doom, depression and the failure of all local authority services. The only dramatic happening of last year was the bundling out of the Socialist Lothian council for ridiculously extravagant spending.

My right hon. Friend the Secretary of State for Scotland deserves our commendation for what he has achieved for Scotland from the Exchequer this year. His managing to get a 4.3 per cent. increase or, in cash terms, £1,924,250,000 for local authorities should be regarded in its true light and not attacked on all sides by the Opposition.

Local authorities have been asked to make no more sacrifices than have many other sectors. It is right that they should be prepared to join the rest of the country in examining budgets closely and being prepared to make savings whenever and wherever possible. Playing one's part in keeping inflation down is of the greatest benefit to the nation. That in turn will greatly benefit the economy. It will be a major step towards bringing back jobs when we move out of the world recession.

If our aim of 5 per cent. inflation in the not too distant future is to be fulfilled, the cash that is provided by the rate support grant is not far from that target. It is understandable that local authorities do not wish to be kept in as close check as my right hon. Friend is determined that they should be. It is only natural for councillors—I have been one—to want to spend money on new ideas, improvements and better services. Nevertheless, in times such as these we must exercise restraint.

It is important to bear in mind that in 1979–80 the increase in local authority expenditure was about 3.2 per cent. In 1981–82 my right hon. Friend reduced it to 0.2 per cent. We are moving in the right direction. My right hon. Friend was right to point out that we should not always be budgeting for expenditure increases. Of course, we must bear in mind the effect of inflation, but if services are running well, and if all those that are required are provided, we should not increase expenditure year by year as a matter of course.

It is most commendable that the Government's restrictions on expenditure have been so modest. There has been no slashing of expenditure and none of the vast cuts
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that we have heard about in the headlines. The vast cuts are to found in the projected expenditure by Socialist councils—expenditure that could not possibly be met by reasonable budgeting.

The Labour party weeps crocodile tears and tends to forget that its circular in 1976 called for a reduction in real terms—something for which we have never called—of local authority expenditure. The Labour party was never worried then about what would happen to services. Its members said that they would cut expenditure in real terms. We have not contemplated that.

Is not what my right hon. Friend the Secretary of State has provided in support for local government this year more in real terms than what the right hon. Member for Glasgow, Craigton (Mr. Millan) provided in 1977?

That is true. I am glad that my hon. Friend has highlighted yet another of the statements by the right hon. Gentleman. When one delves into what he has said in the past, some remarkable things appear.

The right hon. Gentleman did the most tremendous U-turn or somersault in the latter part of his speech, when his usual forecast of a 20 to 25 per cent. increase in rates came down to something very modest. I can see him getting cold feet. He has been taken to task for going over the moon with the most ridiculous anticipatory forecast last year.

The real issue is that our constituents, whom we represent, are ratepayers. They do not wish rates to rise dramatically year by year. Therefore, it is right that local authorities should budget as closely and tightly as possible. Local authorities must make a determined effort to keep rates down. One has only to drive about some of the major cities, which, for their sins, have been under Socialist control, to see the large shops that are now empty and for sale because the owners cannot pay the rates. That is damaging to Scotland's economy.

Opposition Members have only to think of what happened in Edinburgh and, as a result, what happened to the Lothian Socialist council. At the end of the day the ratepayers call the tune. What happened in Lothian may happen in many other Socialist-controlled authorities throughout Scotland. I hope that it does. The sooner they get the message, the more likely they are to stay in power. I am not sure which way I want it to be.

The hon. Gentleman is not paying much attention to the political argument in Edinburgh. Does he recognise that the whole place is up in arms at the cuts, and that even Tory councillors are going to press and attacking the regional council for making cuts in nursery schools? Is he aware that thousands of jobs are being destroyed by the regional council?

I do not accept what the hon. Gentleman is saying. We are dealing with the rate support grant order. I am certain that the ratepayers of Edinburgh and Lothian are thankful that the rate increase this year will be substantially less than the increase over the past three or four years under the Socialist policy of the Lothian council.

I wish to ask my hon. Friend the Under-Secretary of State one or two questions. He will anticipate that I shall want to say something about the rate support grant formula. He was helpful before Christmas in writing to me
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about the needs element. If one excludes the Western Isles, where the headage rate of £730 is ahead of the rest, the regions are covered by a bracket of about £170. I wonder whether that is a sufficient weighting in favour of rural areas, where the costs, distances and bus subsidies are higher, for obvious reasons. I wonder whether my hon. Friend should consider having another look at the formula with CoSLA. CoSLA, being based on the population in central Scotland, tends to say, "Thank you very much for the formula as it is."

I believe that the formula is still weighted against the rural areas and I ask my hon. Friend to reconsider this matter. I believe that, subconsciously, because of CoSLA's weighting in favour of central Scotland, the Government are not giving sufficient weight to the far-flung country areas where costs are much higher than in central Scotland.

I want to ask two questions about the district councils. Thrift deserves its reward, and the outturn, as it affects some district councils and, indeed, some regional councils, is somewhat disappointing to them. I hope that my hon. Friend can tell me about his method of client group assessment. Why does the new formula have to be adjusted as soon as it is prepared? For instance, in Nithsdale the client group requirement is £2.522 million. Why does it have to be adjusted by £0.452 million? Similarly, in Annandale and Eskdale the client group method reduces the figure from £1.655 million to £1.26 million. All these statistics are extremely difficult to grasp, but it would be helpful if my hon. Friend could say a word or two about why the new formula is being adjusted.

The Secretary of State has provided a good settlement. Why is it so necessary for the Opposition, year in, year out, to criticise it in every possible way? If they had their way and there was a massive increase for the local authorities, there would inevitably be higher taxation, a much higher borrowing requirement, higher interest rates and therefore higher unemployment. If that is what the Opposition want, they should be honest enough to say so.

That question cannot be answered without the aid of a host of computers. The local authorities in my area have always done their best to meet the guidelines. They have frequently done so, and the ratepayers have benefited from that achievement. The ratepayers of Scotland want from the Opposition constructive and realistic comment, and the Opposition Front Bench should start providing it right now.

The Secretary of State, of course, is a prisoner of the system that he inherited, which is both unsatisfactory and complicated. I accept that, as he says, he has discussed with local authorities and their representatives many aspects of the order. Whether the results of the consultations have been always satisfactory to either side is another question.

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The Government's handling of local authorities has been distinguished by a failure to deal with the real difficulties, constant meddling in detail and the creation of uncertainty. They have failed to reform the system of local finance and, contrary to their election promises, the rating system remains unchanged. I agree with other hon. Members who have spoken that rates are a serious matter for businesses in many parts of Scotland and in some cases their level contributes to unemployment. The Government have done nothing to define the responsibilities of local authorities, although in two or three Acts they have laid new duties upon them with a mass of detail that has not made the job of local authorities any easier. They have also pressed for more capital expenditure without taking into account the inevitable result on current expenditure.

I understand that the guidelines now proposed imply that there will be cuts in excess of the 4 per cent. which will be the general result of the order. If that is so, it needs far more explanation than has so far been given. As has been mentioned, £90 million will be knocked off education and considerable sums from other activities. Despite inflation, the rate support grant is reduced from 64 per cent. to 61.7 per cent. Whether or not one regards those cuts as justified, they will undoubtedly present great difficulties to many authorities, particularly in rural and island areas.

In addition, and of great concern in my constituency, there is the decision to derate outside plant and machinery. I appreciate that that is now to be dealt with in a separate order and I am grateful to the Secretary of State for his announcement that that order is to be laid today. Nevertheless, it is highly germane to this debate. Unless local authorities have some certainty as to what the position will be, they cannot possibly budget effectively.

The derating of outside plant is damaging where it is not simply pointless. It does not bring Scottish law into line with English law because in England inside plant is not derated. If the law relating to outside plant has to be brought into line, why should not English law be brought into line with Scottish law? The Government's decision will not greatly benefit the oil companies as they will be the principal contributors in increased rates. In any case, I understand that a considerable proportion of their rating expenditure can be set off against tax.

Help was promised by the Government, but the help offered to Orkney through an additional £1.08 million in the needs element, although welcome, will nowhere near compensate for the loss. To compensate for that loss in 1982–83 would require about £2.13 million. In Shetland, the rateable value of Sullom Voe will fall by £12 million or 10p on the rates. I understand that no compensation at all is contemplated for Shetland. Such aid as is given will come from other local authorities. Why? The decision to derate outside plant was taken not by other local authorities in Scotland but by the Government, so I do not see why compensation should not fall on the Exchequer. I believe that the change was suggested by the CBI, but the CBI made it clear that compensation should come from the Exchequer, and it is supported by CoSLA in that view.

I am all in favour of economy in local government expenditure. I do not deny that local authorities must have regard to the general financial state of the country and to the economic policies of the Government. That is clear. Nor do I deny that there are areas of local government in which economies could be achieved and indeed have been achieved by some authorities. Cuts of this scale, however,
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cannot be imposed all at once. For instance, the fall in school rolls cannot simply be matched by a comparable reduction in the number of teachers. Even if it were possible to dismiss 6,000 teachers, which it is not, to relate this simply to the smaller number of pupils in schools would be damaging to education. There should be a fixed relation to population, needs, resources and geographical difficulties. Education should not be at the mercy of sudden changes such as we have constantly suffered over the past few years.

At present it is impossible for local authorities to budget or plan. The method of dealing with local government finance is contrary to the general stance taken by the Government over finance. It is important to simplify matters and to enable local authorities to budget upon firm foundations for the years to come. Local authorities have been rather more successful than central Government in keeping within their targets. It is usually central Government, not the local authorities, who are spendthrifts. I trust that the Government will think again about the cuts, which, I believe, are 7 per cent. on district and 11.8 per cent. on regional councils.

In relation to his own constituency, is not the right hon. Gentleman aware that the percentage increase in guidelines is 6 per cent. for Orkney and 22 per cent. for Shetland? Does he not think that these are reasonable figures?

I am grateful to the Government for what they are doing in my constituency. Does that take into account the severe lack of rateable value that will be suffered by the derating of outside plant and machinery? It is difficult for local authorities to budget or plan until they know whether the Government will stand by their pledges so that local authorities will be compensated for the change.

We have been told that the only local authority that will gain compensation is Orkney, and that will be, so it has been estimated, between a half or a quarter of the amount needed. If the Government have more money to offer, we shall welcome it. We make it quite clear that we are grateful for small mercies. I ask that the whole method of local government finance be re-examined because it is upon the guidelines that the penalties will be assessed. If the guidelines, even if Orkney and Shetland are exempt, are in general lower than the cuts, that would seem to be an anomaly. I ask the Government to consider whether it is fair to lay the burden of compensation on other local authorities and at least for a time not to make good to Orkney and Shetland the loss that they will suffer. It must be the object of the Government that far-flung and rural areas must not be at a disadvantage by these very complicated formulae. If the Government make the anticipated changes, the burden should at least fall upon the central Exchequer and not upon other local authorities.

I am sure that all hon. Members felt some disappointment tonight when, during the speech of the right hon. Member for Glasgow, Craigton (Mr. Millan), the leader of the SDP, the right hon. Member for Glasgow, Hillhead (Mr. Jenkins), left the Chamber. Most of us hoped that, after two years, we would hear the SDP's views on rating and
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rateable values in Scotland. Obviously, the right hon. Gentleman was so baffled by the famous predictions of the right hon. Member for Craigton that he felt he was outmanoeuvred and decided to leave the Chamber.

I was glad to hear the right hon. Member for Orkney and Shetland (Mr. Grimond) say that he believed that local authorities have a responsibility to take account of the overall policy of the national Government, particularly in economic terms. It would have been refreshing to hear the right hon. Member for Craigton applying those arguments while he was the Secretary of State for Scotland. From the moment that the Labour party lost the election he decided that the time had come to switch from being the gamekeeper to being the poacher, and he is now the poacher with a vengeance.

Local authorities have to pay some attention to the national economic scene. It would be incredible and ridiculous to suggest otherwise. The majority of local government expenditure is provided by national Government. The national Government have to find that money in some way. Perhaps, more importantly, the national Government are accountable to the electorate as taxpayers for the way that they raise and spend their money. Local authorities and the national Government will never live together harmoniously until that joint responsibility is accepted.

The right hon. Member for Craigton seemed to suggest that the national Government should always provide money for local authorities when they ask for it. I think that I referred to that last year as the blank cheque mentality. However, towards the end of his speech, the right hon. Gentleman made a prediction that perhaps will be more accurate than the one that he made last year. He said that he expected rate increases this year to be moderate. He explained that they will be moderate because interest rates and inflation are down. The right hon. Gentleman must be true to the logic of his own argument. During the recent by-election at Glasgow, Queen's Park, the right hon. Member for Lanarkshire, North (Mr. Smith) suggested that a Labour Government would borrow money. In effect, he said, "Of course we shall borrow money. We have borrowed money before, and we shall do it again."

The lessons to be drawn from borrowing money are, first, that interest rates go up and, secondly, that inflation increases. If those consequences took effect, the right hon. Gentleman would see rates increasing yet further. That part of the logic of the Labour party's economic argument defeats me. However, I do not believe that it will defeat the electorate when the time comes for its decision.

When the House debated a similar order last year, I spoke about the effect of rate increases in the Lothian region. I was told mockingly by Labour Members that I should wait until the local elections in May to learn what the electors of the Lothian region thought about the argument between high rate increases and services. We had the answer in May. It was clear that Lothian ratepayers were fed up with constantly being hammered by rate increases. They decided that the time had come for a change.

Will the hon. Gentleman explain the logic of a party which gained power on the strength of a manifesto which said that a Conservative Government would wish to extend democracy? Why was it necessary for the Secretary of
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State for Scotland to extend his powers to overrule the wishes of democratically elected district and regional councillors?

It is obvious that the hon. Gentleman has not been listening to me. The majority of local government expenditure is provided by the national Government. There is nothing democratic in a local authority saying that it will spend somebody else's money for which it is not accountable. Democracy depends on accountability. For that reason, my right hon. Friend rightly took powers to control the amount of money that he can provide for local authorities, for which he has to account, and left local authorities to account to their ratepayers for the moneys that they raise and spend.

Does my hon. Friend agree that the British people generally regard Parliament as the ultimate resolver of grievances? One of the great grievances that we come across every day in our constituencies is the burden of increasing rates that is imposed by Socialist-controlled local authorities. If the Government had not acted to control the way in which rate levels are set, they would not have carried out their duty to our constituents.

I am grateful to my hon. Friend for his comments. The right hon. Member for Craigton made a great issue of the fact that under this Government rates have increased by 100 per cent. I suspect that the hon. Member for Glasgow, Garscadden (Mr. Dewar) wishes to intervene to tell me that. I shall save him the trouble of so doing. Perhaps when he replies he will say why the only area where there has been a reduction in rates is the Lothian region. The reduction took place because a Socialist local authority was thrown out and a Conservative authority took office. That shows that when Conservatives come into local authorities which have had profligate Socialist councils over the previous years, rates are actually reduced.

Before I give way, I should tell the hon. Gentleman that the ratepayers in my constituency feel that a reduction of 16p in the pound is worth some of the difficulties that they are facing as a result. They have seen shops in their areas closing and jobs being lost because of the high rates. They believe that the only way to create a stable local authority in the Lothian region and in Edinburgh is to show rather more economic sense than in the past.

We look forward with great interest to see whether the shops open again while the present economic policies of the Government are followed. Will the hon. Gentleman address himself to the key point made by my right hon. Friend the Member for Glasgow, Craigton (Mr. Millan), that rates in Scotland have increased by over 100 per cent. under this Government? As the Secretary of State made clear, that has happened when real spending by local authorities has remained static. How does the hon. Gentleman explain that? Plainly it is not the fault of the local authorities. It must reflect Government support.

I am answering the question, if the hon. Member for Dunbartonshire, Central (Mr. McCartney) will give me time. One of the answers can be found simply by looking at the manpower figures. The amount of extra money that has had to be found within local government in Scotland to pay for extra people who are employed is something which all hon. Members should bear strongly in mind.

The right hon. Member for Craigton, who accused me of interrupting him from a sedentary position, is the expert from whom I learnt that trade. I shall not give way to him at this point.

The right hon. Gentleman talked about cutting services and losing jobs because of cutting manpower, but can he, or his hon. Friend the Member for Garscadden when he sums up, explain how, as Secretary of State, the right hon. Gentleman was satisfied with the position in local government in Scotland where there were 8,700 fewer people employed than there are now? The right hon. Gentleman presided over the biggest cut in local authority manpower in the 18 months between June 1976 and December 1977. There was a reduction of more than 11,000 people employed in local government in Scotland. We did not hear him, as Secretary of State, bleating about the cuts in services and the terrible implications that would have for people living in those local authority areas. The reason was that they were achieved painlessly and simply without many redundancies, but by simply not replacing people whose jobs came to an end.

The right hon. Gentleman knows, I know—and I hope that my hon. Friend the Minister will confirm this when he sums up—that this can be done again. There is no point in the Government making money available to local government, as they have in what I believe to be a reasonable package, unless efforts are made to cut out those areas where there is overmanning. If that is the sole achievement from the package this year, not only the people of my constituency but the people of Scotland as a whole will be grateful to the Government.

I hope that the hon. Member for Edinburgh, South (Mr. Ancram) is a better lawyer than he is economist. He certainly is no economist, as he proved during his speech, because he does not understand economics. With his last point he followed his right hon. Friend the Secretary of State in seeking yet again higher unemployment in Scotland. That is what he means when he advocates cutting manpower and cutting out wastage in local government. He is talking about more unemployment and adding more people to the dole queues in Scotland.

I make the point that I have made time and again. I am sure that it is getting a bit boring now. The debate should be taking place not in this Chamber but in an assembly in Scotland. We should have two or three days to discuss the matter fully and local authority representatives should not have to spend large sums to come down here to talk to us. They should be meeting us in Edinburgh. That is where the debates should be taking place, and that is where, when the next Labour Government come to power they will take place.

The Secretary of State for Scotland and the former Secretary of State for the Environment, the right hon. Member for Henley (Mr. Heseltine), according to the newspapers just before Christmas, were competing for the
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post of Secretary of State for Defence. The Secretary of State for Scotland lost that particular battle. I gather that he lost it because it was considered that the right hon. Member for Henley would do a better job in combating the peace campaign.

Yes, Mr. Deputy Speaker, I can assure you that it does. It is an appalling indictment of the priorities that this Government give to the social spending of local authorities and to the problems of inner cities, of those who are badly housed and of dampness in houses that the Secretary of State for Scotland and the former Secretary of State for the Environment should consider it a promotion to go to the Ministry of Defence. My hon. Friends will know that no Labour Secretary of State for the Environment or Secretary of State for Scotland would consider it a promotion; they would consider it a demotion. It is an important point. It relates to the way in which—[Interruption.] I assure hon. Members on the Government Benches that I checked with my right hon. Friend the Member for Glasgow, Craigton (Mr. Millan) before I made that remark. He would not want to move to be Secretary of State for Defence. This Government put a higher priority on expenditure on death than on social spending to ensure that the old and the young in our society have a decent standard of living.

I turn to a particular issue in relation to Government spending—the question of money being spent or not being spent on leisure, recreation, the arts, museums and libraries. It is all to do with how people spend their leisure time. If the Secretary of State gets his way, local authorities will be obliged to cut spending on leisure and recreation by 33.3 per cent.; spending on libraries and museums will be cut by 13.3 per cent.

I am not by any means making a threat, but Glasgow has just spent an enormous capital sum, along with the Government, on a new building for the Burrell collection. If Glasgow district council carries out the cuts in spending on libraries and museums, will it be able to maintain the Burrell collection?

That is the sort of appalling waste that could come from this Government's policy. There would be enormous capital expenditure, but Glasgow could not open the collection or keep it open for the public because of the Government cuts.

My right hon. Friend the Member for Craigton and my hon. Friend the Member for Edinburgh, East (Mr. Strang) raised the question of what will happen to our great national art organisations, in particular the Scottish National Orchestra and the Scottish Opera, if local authorities do not spend money on them. If Glasgow district council, which now has the responsibility for giving those subsidies to the organisations, has the choice between closing the swimming pool in Castlemilk and giving money to the Scottish National Orchestra or the Scottish Opera, very reluctantly, I would have to say that it should keep the swimming pool in Castlemilk open.

If Glasgow district council were to carry out the Government's instructions about leisure and recreation,
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that is the choice that they would have to make. The local authorities have told us that if the cuts in leisure and recreation were to be made, every swimming pool and sports hall in Scotland would be closed.

How do the Government relate such a demand to the fact that the Under-Secretary of State, his Department and the previous Under-Secretary of State have been running a campaign called "Fit for Life" in which people are advised to give up smoking, go on a better diet and take up more exercise through organised sport?

The Scottish Sports Council has been running a campaign to give more people an opportunity to take part in sport, yet the Government are demanding that local authorities close recreational facilities. What an appalling indictment that is of a Government who are spending money on campaigns on the one hand and demanding cuts on the other. That makes no sense.

The recreation and leisure cuts do not relate simply to district authorities. Regional authorities may also have to make cuts in the way that community centres and schools are used for evening classes and evening recreational purposes. If the Government had their way, the regional authorities would have to cut their educational budgets. Schools might not be open in the evenings for badminton and other recreational classes. Luckily, of course, our local authorities will refuse to carry out such cuts. They see the enormous suffering that the cuts would cause.

At the same time as the Government are seeking a massive reduction in facilities for leisure and recreation, they are increasing unemployment through their economic policies. They have also increased by 8 per cent. in real terms the amount spent on the police since they took office. They have introduced further powers for the police and new offences. Have their policies led to a great reduction in crime? Today, I received the crime figures for Castlemilk in my constituency. In 1978, 113 crimes of violence were committed in the area and in 1981, the last full year for which we have figures, the number was 180. Crimes of dishonesty in the area in 1978 were 1,634 and in 1981 the figure had risen to 2,046.

The increased spending on law and order has not solved the problem of increasing crime. That is caused by increased unemployment, poorer housing and poorer leisure facilities that leave little else for people to do. Those conditions create crime. Instead of spending increasing sums on law and order and on trying to solve crimes after the event, the Government should spend it on removing the causes of crime.

The Government's actions are frightening—the move to reduce democracy in local government, the latest attempt to do away with free trade unions and the increasing expenditure on law and order and defence. I do not accuse any individual or even the Government as a whole of deliberately doing so, but they are preparing the ground, as any historian knows, for a Fascist state.

The latter part of the speech of the hon. Member for Glagow, Cathcart (Mr. Maxton) was quite offensive. No one could seriously believe that in Britain, the mother of democracies, any of us would attempt to destroy our democracy. If the hon. Gentleman sincerely believes that, perhaps he is more out of touch than some of us believed.

The hon. Gentleman gave us an interesting introduction and mentioned the problems of my hon. Friend the
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Member for Edinburgh, South (Mr. Ancram) in understanding economics. I listened carefully to what the hon. Gentleman said, because I presumed—obviously incorrectly—that he was about to make a speech that illustrated clearly that he had some knowledge of economics and that he would clarify what he said about my hon. Friend. However, his speech contained no economically sound proposals.

The hon. Gentleman mentioned the problems of the inner cities and the environment. Everyone in politics cares genuinely about the problems that many of our citizens face. However, the hon. Gentleman, as usual, managed to score some own goals. I am glad that I do not play in a football team with him, because trying to score more goals than he scores against his team would make life difficult. Everyone knows that the right hon. Member for Glasgow, Craigton (Mr. Millan), when he was Secretary of State, was forced to face the problem of overborrowing and overspending. He took action to deal with the problem. Sometimes his hon. Friends do not recognise the tremendous courage that that required at the time. I commend the right hon. Gentleman, because it took real courage.

It still takes real courage to face the facts of life. The Labour Government, under the direction of the IMF, were forced to face the fact of life that somehow central and local government borrowing at that time had to be reduced. I emphasise the words "at that time". The hon. Member for Cathcart should face that lesson in economics. Many of the things that everyone would wish to be done sometimes cannot be done by a given time because of circumstances over which national Governments have no full control. An example of such circumstances is overseas events. The problem faced by the Labour Administration was caused by the escalating price of oil. It would be nonsense to claim that that factor did not affect our plans.

The basis that we use to work out local government expenditure programmes and fund-raising programmes—indeed, the entire financing of local government—is unsatisfactory. The guidelines are a rough and ready way of achieving our objective and are most unsatisfactory. I hope that my right hon. and hon. Friends on the Front Bench are trying to find a more satisfactory way of achieving our goals. The right hon. Member for Craigton put his finger on it when he mentioned the problems that Perth and Kinross district council will face. It would be nonsense to pretend otherwise, and I shall never come to the House and do other than present the facts as I see them. The district council faces the problem because the guidelines are rough and ready and are based largely on historical fact. If one starts with a low expenditure base and adds to it year by year, and others who start from a higher expenditure base do the same, inevitably the expenditure per head of population becomes increasingly compounded and distorted. That is basic mathematics. It may not be economics as the hon. Member for Cathcart understands it, but there is no doubt that if one uses an historical basis and one authority has been prudent for 10 years and has said "We shall be careful with our expenditure programme over a long period" and has started at a cut-off point, that authority will be disadvantaged from then on in terms of the guidelines that are worked out.

It would be better to take as a base the expenditure per head of population. As my hon. Friend the Member for Dumfries (Sir H. Monro) said, there are problems in rural
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areas as well as in urban areas. I do not want to argue for either, because our job is to do the best that we can for both. If we work on the expenditure per head of population and the services that are provided per head of population, we get closer to a fairer method. That is all that I want. I am not asking the Government to increase expenditure, and there would be no point in doing that in these difficult times. However, we must make sure that what we do is fair to all.

I should be quite happy to argue on behalf of the residents of Dundee if there were areas there that needed attention. However, I am not prepared to accept a situation whereby the residents of Perth and Kinross are disadvantaged because they have been more prudent than others over a long period. That is the argument that I wish to put to my hon. Friend the Minister. I hope that he will study the expenditure per head of population and the services that are provided within that authority to see whether we can find a more equitable way of spending the funds that are deemed to be available.

We should also look carefully at how any deficiencies and gaps in planned expenditure are to be covered. Under the present system, it is done by rating. If the local government contribution is to be reduced, we must be careful not to distort the balance between one area and another in rating. To illustrate that, one only has to look at the massive plans for house building in the area immediately adjacent to Dundee district, where rates are so much lower than in Perth and Kinross. However, the residents of Perth and Kinross know that they have a prudent authority and they expect this Government to support prudent and responsible authorities in the most meaningful way.

I fully understand that the guidelines are a broad brush. They are rough and ready, as I said earlier. I accept that the authority of the right hon. Member for Orkney and Shetland (Mr. Grimond) was given proper consideration because it was well above the proposed guidelines in previous years. I hope that the Minister will assure me that the same consideration will be given to the good and prudent authority of Perth and Kinross.

This afternoon we all had the opportunity of listening to an all-party delegation from CoSLA. The startling, although not surprising, thing was its generally unanimous contempt for the way in which the Government have handled local government finance over the past two or three years.

I do not pretend to understand the complexities of these matters, but the crux of the argument can be put simply. The Government, being the principal provider of money for local authorities, have an undoubted right to determine the size of that element at any one time, and whether it be higher or lower depends entirely on the Government's assessment of the national economic situation. Therefore, the Government are right to assert that position. Successive Governments over the past few years have asserted that right to ensure that local authorities conformed with their view. However, the Government are now determined to compel local authorities to spend no more than what they think local authorities should be spending and at the same time to slash their part of that expenditure.

The Government work out what they will pay local authorities by the complicated formulae to which I have
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referred. The Government determine what is fair and reasonable expenditure. I served on the Committee which dealt with that aspect of our legislation. Initially, the Government were content to issue guidelines to local authorities. The very word "guideline" implies a degree of flexibility and discretion for local authorities. That nomenclature has taken on a rather more sinister meaning now. It seems that the guidelines are much harsher and more punitive, not to say vindictive, than they have been in the last year or two.

By any definition we are talking about substantial sums. My right hon. Friend the Member for Glasgow, Craigton (Mr. Millan) has referred to education. Education is one of the most crucial and expensive services which is primarily provided by local authorities acting as virtual agents of Government. My right hon. Friend referred to the cuts in that vital service of £98 million this year. That is a substantial sum indeed. It is the inalienable right of every citizen to have an education from birth to death of sufficiently high quality to draw out of him or her whatever intellectual capacities he or she possesses. Education should be the last to suffer public expenditure cuts, yet the Government are proposing a cut of nearly £100 million. My right hon. Friend said that a cut of £55 million could result in 6,000 fewer teachers in the Scottish education system. The Secretary of State was careful not to deny that that was a real possibility and a dangerous threat to Scotland's educational fabric.

My hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton) mentioned the cuts of about 33 per cent. which are being visualised for recreation and leisure. We were told this afternoon by people who impressed us all by their great knowledge, sincerity and responsibility for education that a cut of 33 per cent. in leisure and recreation services is the equivalent of closing down every swimming pool and sports centre the length and breadth of Scotland. That is the measure of the cut that is being imposed on local authorities in Scotland. That is coming at a time when the quality of life is being threatened by unemployment and when the unemployed should have increased access to such facilities. At the very time when they are most needed, the Government are cutting down.

The same applies to concessionary fares. One of the great problems for our old people is mobility—being able to meet their friends, relatives and neighbours. They depend more than most on concessionary fares on our buses, particularly in the rural areas but also in the cities. Those concessionary fares are to be cut by more than 40 per cent. which will mean a real reduction in the standard of living of the poorest in our society. Therefore, the quality of life of the poorest in our community, whether they be the old or the unemployed young, is being hit hardest by the Government. The same will apply when we debate housing later today. Those who can ill bear the sacrifices are having them imposed upon them to an increasing degree.

It is a mean order. It means the undoubted diminution of quality of life for our citizens, who are primarily represented by the Opposition. Labour local authorities are making it clear that they have no intention of accepting the Government's directives, come what may. They will preserve the quality of life and the services that they were elected to operate, and they will receive support for that in the coming local and general elections.

My hon. Friend the Member for Fife, Central (Mr. Hamilton) spoke about the experience and expertise of the local government representatives who formed part of the lobby that visited the House today. One of the differences between the local government system and that of Parliament is the extent to which local government officials and councillors specialise in certain subjects. Such specialisation is not always found in our parliamentary system. Civil servants and Ministers change, and some of those making vital decisions today will not taste the medicine in a few years' time when the problems occur.

I understand why some Conservative Back Benchers are ready to go into the Lobby to support the Government in pushing through the order. But a dangerous trend is developing of the Government viewing themselves as an anti-local government party. It is left to the Opposition to advance the positive case for local authorities. Time and again today the Government appear to view local authorities as good whipping boys. They believe that attacking local government is good for the recovery of private industry. The facts contradict that philosophical approach because there has been a marked decline in private industry. The figures show a 1¼ million drop in the number of people working in private industry during the first two years of the Conservative Administration. The Government's economic policy is crumbling and local authorities are being asked to pick up the pieces.

Local government must deal with the problems of the unemployed; and also cope with a larger proportion of elderly within the community and their special needs such as housing, or added demands on social services. The number of homeless is increasing, as is the number of families breaking up because of cash problems. The effects of that on many children is placing increasing demands on the social services, yet the Government are cutting their central contribution.

The right hon. Member for Orkney and Shetland (Mr. Grimond) referred to the derating of external machinery and equipment. Other local authorities will have to bail out those local authorities primarily involved in that change in the legislation.

The CBI, which initiated the move, is quickly backtracking because its members up and down the country will be hit as a result of the changes in the rating and valuation system. A greater burden is being thrown on to fewer shoulders. We are witnessing the erosion of the rating base. Industrial concerns are closing. As has been pointed out, more and more shops and commercial enterprises are going out of business with the recession and the local authorities lose rates for those premises. Local authorities are facing a shrinkage in the rating base at a time when the Government are savagely cutting their central contribution.

I shall raise three specific points with the Minister. The Secretary of State is adept and he managed to skip over the changes in urban deprivation. This measure will be a big blow to regions such as Strathclyde, with the problems in the inner city areas and with the high level of unemployment that persists in the west of Scotland. It is sad that the Government have given their approval to the Scottish Development Agency to withdraw from Glasgow's east and renewal. I hope that it does not alter
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the input of the Scottish Special Housing Association which would affect the assistance given to tackling the city's problem of urban renewal.

I should like the Scottish Office to make a positive move towards supporting some of the priority areas that Strathclyde region has designated such as Maryhill Corridor Project. The various agencies should move into the inner city areas. The Government usually say that they leave the region or the district to sort out their priorities. However, they know full well that both regional and district councils are experiencing reductions in the resources available to them. It is most unfortunate that the Government should decide now, at short notice, to withdraw the extra teachers available through the urban aid programme. They were a positive advantage to areas such as mine. If Strathclyde region wants to fund those teaching posts, it will have to increase the rates. Therefore, the Government should have a change of heart.

Reference has been made to the problem of leisure and recreation. More young men and women are now hanging about, filling in time, because they do not have jobs. Facilities that those young people would use are now being closed. If, because of their economic policy, the Government cannot provide youngsters with permanent jobs, they should at least recognise the growing need for leisure and recreation and do something to mitigate the plight of those youngsters. One can play about with as many Stodart reports as one likes, but hon. Members know from their constituency correspondence that bowling greens and swimming pools are being closed and that libraries are shutting earlier. We are not utilising the existing social equipment.

We have the nonsense of the Prime Minister in the Queen's Speech debate criticising the local authorities for not spending all their money on capital projects at a time when the Government are reining back on their revenue expenditure. In Glasgow, one of the options was to close libraries on Saturdays or on three or four days a week, while, at the same time, a local authority might be able to get the necessary capital approval to build a new library. It is nonsense that the Government and their advisers should carry on in that way.

I should like to refer briefly to restrictions on housing. Am I right in thinking that the Government are prepared to hand out £5 million through the Housing Corporation in Scotland to develop shared housing to encourage people to have a 50–50 rent-ownership arrangement? I do not quibble about the concept, but it appears strange that for the immediate future some private builders who have not been able to sell their houses might find those houses taken over by the housing associations as a means of introducing the concept of shared ownership. If the private market is so good, surely the private builders would be able to sell all their houses without any need for public support.

Moreover, the Minister is aware of the problems that are cropping up for local authorities over the operation of the rate support grant when conducting the modernisation programmes that we should like to see implemented. Most Members of Parliament are being made aware of areas which would like to have their local authority houses modernised. The problems facing Glasgow district council at present are precluding the necessary modernisation of much of this housing. The district council is contemplating a rent increase of 6½ per cent. at a time when the Government still adhere to their policy of 4 per cent. pay rises in the public sector.

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More and more family budgets are under pressure, not least from travelling costs. I hope that the Government will consider again the problem of public transport. In Strathclyde, it appears as though there will have to be a fares increase of 5 per cent. In my constituency 80 per cent. of the public depend on public transport. Perhaps the Government will consider again how motorway development is funded, not that there is a great deal of it left nowadays. It still appears to be easier for the regional authority to develop in that way. I hope that the Government will seriously reconsider the amount of support that is available to the region for its transport services. Ministers may wax eloquent over the operation of the guidelines, but, looking through the papers that we have received, it is remarkable how scanty and skimpy the information is. The Under-Secretary of State is smiling, but the people who have to take the hard decisions are those in local authority committees who have to deal with the priorities that the guidelines impose on them.

The number of people receiving rent and rate rebates is increasing. The Minister should tell us exactly how many people are in receipt of rent and rate rebates because that will show the extent to which people are falling outwith the burdens that the Government expect local government to carry. The Government have failed to act on their promise to reform the rating system and local government. They use the rate support grant as an annual excuse to obscure the fact that they are failing to keep election promises.

The hour is late so I shall endeavour to be brief in spite of the extreme provocation to which I have been subjected. Government Members have given the impression that only Labour-controlled local authorities will be disappointed with the settlement, but they are mistaken. I draw to the attention of the House, in the absence of the hon. Member for Caithness and Sutherland (Mr. Maclennan), the views of Sutherland district council. It has not been taken over by the Militant Tendency. Its chairman is not Mr. Arthur Scargill, far less is it Mr. Michael Connarty. It is not even run by the SDP, which is not represented on the council. Referring to Sutherland district council, The Scotsman reported:
Of a threat expressed to storm St. Andrew's House and of a mass resignation, the council chairman, Mrs. Mackenzie, said after yesterday's meeting at Dornoch: 'You can take that seriously. We have in the past as a council taken a conscious decision to go along with Government guidelines very consistently. But a situation has now been forced on us because for lack of money we have had to go over these guidelines. … It's disgraceful to hit out at a small fragile economy such as ours. Have they no conception of the area we cover, how scattered is the population, and the expense we have to go to just to keep normal services running?'".
That is the view of a small council, but it is an important view. It should be considered seriously. It is a view that is shared by the regional and island councils and by the 53 district councils in Scotland.

In his statement tonight, and in his statement before Christmas, the Secretary of State gave the impression that he was not bearing in mind, particularly when he was highly critical of manpower levels, the fact that Scotland is a different country from England and Wales and has different problems. Scotland contains twice the number of council houses per 1,000 of population than England and Wales and all the staffing problems that go with that.

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One must take account of the sparsity of population in Scotland and the problems that go with it. Many Conservative Members represent constituencies of that type. They should be more aware of such problems than we are. Our settlement of the rate support grant should reflect the problems that those areas face.

The Secretary of State took the view that there should be widespread disappointment about the staffing figures. I do not agree with his objectives. He was mean and not grateful to Scottish local authorities last year when they reduced manpower levels by 2 per cent. What is more, in doing that they reduced the projected target of rate increases for which my right hon. Friend the Member for Glasgow, Craigton (Mr. Millan) has been severely criticised. The fact remains that if they had kept their manpower levels at the level of the year before, the projected rate increases would have been realised.

I shall ask a question which I believe many Scottish people are asking. If, as the hon. Member for Edinburgh, South (Mr. Ancram) says, we must relate all these matters to the economy, why are we so determined to throw people out of employment in local government, especially in the manual sectors, thereby adding to the unacceptably high level of unemployment in Scotland? Local authorities do not want to do that.

Local authorities have been given the duty, by statute, of dealing with industrial development and promotion. They are keen to discharge that duty, but shops that are closing are not doing so as a result of rate increases, regrettable though they are. Rates are a small percentage of the costs that shopkeepers must meet. Shops are closing because of the Government's economic and industrial policy. As has been reiterated throughout the debate, that policy, combined with the settlement that has been presented to the House today, represents a severe blow to the objectives of Scottish local government.

Every year when we debate these orders dissatisfaction is expressed at the way in which local government is being treated. Today's debate has shown even more sharply than those of previous years the utter dissatisfaction that seems to have penetrated every echelon of local government about the way in which it is treated financially. Opposition to what the Government are doing extends far beyond the financial terms of the settlement.

Those hon. Members who had the opportunity to meet CoSLA representatives this afternoon were impressed that from their different political points of view they were all extremely critical of the methodology by which the Government have approached this year's settlement. They were also critical of the attitude with which the Government approached the subject. They felt that it was almost as if the settlement had been dictated and laid down on high on tablets of stone. When they were consulted, they were told what would happen. They had little influence or control over the outcome of the settlement.

I do not have experience of local government finance, but one of the things that I have noticed while I have been a Member of Parliament is the complex way in which figures are drawn together. Even to this day I feel that it is a case of the blind leading the blind. The House does not face the problems of trying to deal with local
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government finance to maintain services and provide facilities for constituents as must councillors. It is true that we frequently call on local authorities to provide facilities for our constituents. In many cases they provide them, but the worry of finding the money with which to do so is one that we do not have to share, although, politically, sometimes we have great sympathy.

With regard to methodology, the Government will have to accept, from what we have heard from CoSLA, that there has to be a change in the way in which the rate support grant settlement is achieved and consultation at an earlier stage. The Government, not just on minor matters, must show that they are willing to listen to the real problems that emerge, which the local authority councillors can explain to the Government from their practical experience.

With most Governments there will always be limitations on the amount of money that is available. That is why it is essential that even within those limitations the Government should have the flexibility and willingness to listen to what our councillors suggest.

On that basis I recommend to the Government that, even if they are not prepared this year to consider any major changes, they should look at the complexity if not silliness of what has happened with the development of the guidelines, which now seem to act as a distortion and get in the way of local authorities. That, combined with the link between capital and revenue expenditure, tied up in a peculiar fashion, makes it extremely difficult for local authorities to function. It is strange that, when calls are made by the Government to local authorities that they should go on a capital spending boom, they find that they cannot do so and thus achieve the goals that the Government have set simply because of the restrictions on revenue expenditure imposed by the Government.

The Government must change their line on methodology. In the House I frequently feel that—I am not talking about just my own utterances on the subject—when other hon. Members make suggestions to the Government about the way in which the system is run and what changes should be made, they are not being heeded. In a sense we are dictated to. In such debates we can give our opinions. Sometimes we can help local authority councillors who cannot put their opinions directly in the House, but with the full knowledge that the Government will not listen and that there will be little change. When we vote, we vote on the global sum. Even if we could not change the volume of expenditure, it would be of much more interest and more useful if we could vote on individual items of expenditure, as many other Parliaments do. Perhaps the Government should consider that matter. A Conservative councillor from CoSLA whom I met today described the present set-up as an utter shambles. He said that not out of disloyalty to his party but out of frustration at the confusion that has been caused.

We must also accept that one of the inhibitions that we are facing in the debate is that the mandate for the cuts comes from the Treasury. It has no relevance to Scotland. The needs are here. We have a duty as parliamentary representatives to see that those needs are adequately taken care of, but the Chancellor of the Exchequer and the Cabinet, through a majority that was not elected in Scotland and a mandate that they do not have, are able to trim the amount of money and therefore the services that are available to our people.

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I repeat the figure of 5.65 per cent. in 1980, which by 1985 will be 5.05 per cent., of United Kingdom expenditure available to Scotland. That means that, in a sense, over five years Scotland will have lost over £2 billion. When we realise that that money is disappearing and not being made available as Scottish expenditure, and is being brought down to the same level as that in other parts of the United Kingdom, we are aware of why the Health Service is suffering, why roads are deteriorating, why money is being trimmed off education and why housing is being trimmed substantially.

I shall not have the opportunity to make this point in the next debate. Through the housing support grant the Government are inflicting untold injury and damage on the housing system in Scotland. When mortgage interest rates are coming down it makes no sense to jack up the rents to the extent that the Government have in mind. In terms of equity if not of sense, they should realise that they cannot get away with that. If the Government wanted to create inequalities in society, that would be the right way to set about it. I cannot see why the Government propose to give no housing support grant to Dundee, with all its housing problems, or to other communities with the same problems of social and economic disparity from which many of the constituencies represented by Conservative Members do not suffer. I ask the Government to think again. The rate support settlement and the housing support settlement for this year are utterly unjust.

I shall deal first with the first complaint of the right hon. Member for Glasgow, Craigton (Mr. Millan), which was about the timing of this debate. This is the second year in succession in which the Government have provided time before 10 o'clock for a debate on the Scottish rate support grant settlement. That contrasts with what happened when the right hon. Gentleman was Secretary of State. The debate on the 1977 order started at 11.40 pm on 22 December 1976. The hon. Member for Glasgow, Maryhill (Mr. Craigen), who rose to speak today at 9.31 pm, will remember that in 1978 he started speaking at eight minutes past 12 midday on a Friday. The House should accept that we have provided a reasonable time for this debate.

Certain Opposition Members give one the impression that restraint in local government expenditure is a new concept. My hon. Friends the Members for Perth and East Perthshire (Mr. Walker) and for Edinburgh, South (Mr. Ancram) have both pointed out that the hon. Member for Maryhill and his colleagues took a similar line when they were in Government. The right hon. Gentleman told the House at that time:
there are not many people in the country—and certainly not in local government, who believe that the way out of our current difficulties is by reflation through increasing public expenditure."—[Official Report, 15 December 1976; Vol. 922, c. 1127.]
It was the right hon. Gentleman who pointed out that his Government's White Paper stated that
the substantial rate of expansion in recent years in local authority manpower and in local spending could not continue, and that any increases in individual services had to be offset by reduced levels of provision in other services."—[Official Report, 22 December 1976; Vol. 923. c. 850.]

The Labour Government doubled unemployment. Labour Members have tried to make out that the economies sought by the Government this year are somehow unreasonable or unacceptable, but let us consider the settlement before the House. The total allowed by the Secretary of State for relevant current expenditure is the key figure. If, as we hope, total expenditure is within that figure, there will be no need in Scotland this year, as there was last year and in certain years under the right hon. Gentleman's Government, for a general abatement. As my right hon. Friend pointed out, local authority expenditure has risen steadily in real terms since 1977–78, which was not a year in which there were complaints about the level of services. Against that background, the economies of 3 to 4 per cent. for which my right hon. Friend asks—we do not dispute the right hon. Gentleman's figure—are perfectly reasonable and acceptable, as my hon. Friend the Member for Dumfries (Sir H. Monro) pointed out. My hon. Friend was similarly correct in pointing out the effects of the recession elsewhere in Scotland.

The Opposition have also not answered my right hon. Friend's points about the increase in manpower. Local authority manpower in Scotland is now 2.6 per cent. above the lowest level under the Labour Government, whereas in England it is 5.4 per cent. less than when the Government came to office and 3 per cent. lower than the lowest figure under the Labour Government. That shows that economies can be made. They have been made in England and in some Scottish local authorities but not—this is the problem—in all of them.

Several hon. Members referred to the unallocated portion. Of course we should have preferred not to take that line, but it was forced on us by the difficulty of bringing local authority expenditure into line with the Government's programme.

I was also asked some detailed questions about the guidelines. My hon. Friend the Member for Dumfries and the right hon. Member for Craigton asked about the policy adjustment this year in relation to the expenditure need figures. In the interests of stability, the cash increase over 1982–83 for each authority, excluding the urban programme, is to be held within a range of plus or minus 25 per cent. of the average cash increase in the level of relevant expenditure. With regard to the exclusion of the urban programme, I shall return to the point raised by the hon. Member for Maryhill.

My hon. Friend the Member for Dumfries referred to sparsity. Rate support grant expenditure per head is higher for the rural authorities in Scotland than for the urban authorities, with the exception of Strathclyde which has particular problems, thus reflecting the importance of sparsity. I shall write to my hon. Friend the Member for Perth and East Perthshire on the detailed points that he raised with me.

We have to consider the changes in the distribution of the rate support grant system and in the methodology of the guidelines in consultation with COSLA as a whole. Of course, different authorities have different views on some of the detailed changes, but I assure my hon. Friend that the distribution of the rate support grant distinctly favours the primarily rural regions
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as compared with the primarily urban regions. This reflects the fact that, as he rightly says, costs tend to be somewhat higher in rural areas as a result of sparsity.

My hon. Friend the Member for Perth and East Perthshire asked about historical expenditure being reflected in current guidelines. That was certainly the case in the 1982–83 guidelines, but it is much less so in the 1983–84 guidelines, and I accept my hon. Friend's general proposition that one should try to reduce the emphasis on historical patterns of expenditure in moving towards a client group approach.

I think that the right hon. Member for Orkney and Shetland (Mr. Grimond) will accept that the expenditure guidelines have been substantially changed in the case of Shetland to reflect the particular problems in relation to oil development. With regard to external plant and machinery the order includes the provision for Orkney. The right hon. Gentleman will accept, however, that in relation to Shetland there is real uncertainty as to the rating resources that will be available. Currently, they are about £10 per head as compared with £2.60 per head for other authorities, but, as Sullom Voe will mean changes in the rating base, a totally unpredictable element will be brought into the calculations. I hope that gives some reassurance. We shall certainly consider whether there are measures which should be taken when that major uncertainty becomes resolved.

A number of hon. Members have referred to education. This year we are facing a 3 per cent. decline in pupil numbers. the teacher-pupil ratio that we are planning for 1983–84 is 21.8 for primary education and 14.6 for secondary education. That is almost exactly the same as the ratios which the Labour Government had in 1978–79, and in previous years the ratios were worse. We are increasing non-teaching costs by6.5 per cent. per pupil. I think that that is a perfectly reasonable total for education.

Several hon. Members have suggested that the settlement is biased against those who are particularly vulnerable in our community. The hon. Member for Dundee, East (Mr. Wilson) and the right hon. Member for Craigton referred especially to housing. I shall respond to those points at the end of the debate on the next order but I appreciate that hon. Members wish to take this opportunity to speak on housing.

The increased provision for social work, which is the key element in local authority expenditure that most affects the needy, is an increase of £21.3 million from £249.6 million to £270.9 million. That will enable local authorities to maintain their services and enable real growth of 2 per cent. in the level of service. That demonstrates quite clearly the Government's commitment at a time of great difficulty to ensure that resources are made available to maintain and improve facilities and services for those in our community who are most in need.

The hon. Member for Maryhill raised two matters of importance which were not reflected in the more general comments of other hon. Members. He said that urban aid expenditure was being taken out of the guidelines, it having been put in as a policy adjustment for 1982–83. Taking it out adversely affects Strathclyde, but there has been no change for Glasgow district. Strathclyde has benefited from the 25 per cent. plus or minus adjustment.

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I emphasise that taking urban aid expenditure out of the guidelines is helpful to those authorities which have substantial urban aid programmes.

The hon. Member for Maryhill mentioned GEAR and I shall clarify its position. The Scottish Development Agency has commissioned a series of excellent review reports by consultants about the next five years for GEAR. The GEAR management committee, which includes the Strathclyde region, Glasgow district, the SDA, the health board, the SSHA and the housing corporation, agreed at a recent meeting that in the light of the reports they would draw up a statement of priorities for GEAR to be considered at the next meeting of the management committee.

There are two issues which the Minister could helpfully clarify. I understand that the Scottish Development Agency is no longer to be the managing agent of the GEAR project. Will the Minister explain briefly why this decison has been made and tell us who is to be the managing agent? Secondly, there has been a statement to the effect that the Scottish Special Housing Association is to concentrate from now on on special-need housing. Some of us have inferred that the significant general housing effort and input into GEAR will not be maintained. Is that a fair inference to draw?

I hope that the hon. Gentleman will accept that it is reasonable that, when the SDA's major rehabilitation work in GEAR is concluded in about three years' time, the management and co-ordination effort in GEAR should be returned to the local authorities. I hope that it will be accepted also that there should be a full five years for review. If the hon. Gentleman consults the local authorities, I think that he will find that they are not unhappy with this reasonable proposition of passing the management to them. I can assure the hon. Gentleman that the SSHA's commitment to GEAR will be met.

The most important person in this settlement is the ratepayer. The right hon. Member for Craigton rightly did not repeat his horrific forecast of last year for this year's outturn. We believe that the increase in rates will be within the rate of inflation. We have had encouraging reports from a number of authorities. My hon. Friend the Member for Edinburgh, South (Mr. Ancram) referred to the Lothian region. It appears from press reports that the Lothian authority is considering a reduction in its rate. I hope that that shows that the settlement before the House is reasonable for the taxpayer, for the ratepayer and for responsible local government. Accordingly I commend it to the House.

I am grateful to the Minister for what he has said about my constituency. However, will he tell us when the uncertainty about Sullom will be resolved? That is of great importance for the local authority.